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At the Indigo Plateau, the battle for the new champion of the Pokemon League is about to begin. The crowd cheers in a frenzy as the two young trainers from Pallet Town, Red and Green, step up on stage to have their rival showdown. As both boys pick up their first pokeball from their belts, Bill watches in the audience stand nervously and wonders what pokemons they would send out first. The announcer commences the match and the two boy immediately toss out their pokeballs and spring to their feet. Green's Charizard and Red's Saur pop out from their balls and let out deafening roars to show off their strength. Blue and Bill gasp at the obvious type disadvantage and Green remarks that he knew Red was expecting him to have Golduck as his pioneer, and thus changed his usual battling pattern. He orders a fire spin from Charizard and Red instantly motions Saur to dodge the flames. Charizard charges again with a firepunch but Saur stops it with a puff of smoke from the flower on it back before the attack makes contact. The fire dragon leaps back in pain and Green realizes it has been hit by a poison powder. Red grins and orders a razor leaf from Saur, knocking Green and Charizard across the stage but doesn't do much damage. Bill yells for Red to save his pokemon's energy for later and the boy withdraws Saur and sends out his Snolax.

Lax prepares to deliver a megapunch and Green immediately switches in his Machamp to halt the attack midway with its arms. Red then orders a megakick but Machamp pins Lax's feet down as well with its other two arms. The audience watches with bewilderment and Oak grins with content that both boys have grown. Lax begins to press against Machamp with its body weights and is about to topple Machamp over when the superpower pokemon all of a sudden lifts it up and spins it around into a submission attack. Green remarks that with its four strong arms, Machamp can seal its opponent's arms and feet while engaging in an attack at the same time. Bill realizes with a start that the boy has had the moves all planned out as Machamp tosses Lax down with a slam, creating cracks on the ground of the stage. Red gets slightly taken aback by the fighting pokemon's strength but remains silently and still. Bill wonders what the boy has in mind when he sees that Lax's body is starting to turn stiff and angular, and immediately realizes Red is tempting his opponent to make its next move while secretly commanding his Snorlax to defend itself with harden.

Green orders a karate chop from Machamp and Red waits patiently for the attack to strike, hoping that the direct contact with Lax's hardened body would at least injure one of the pokemon's four arms. But to his surprise, Machamp delivers its blow onto the cracked ground instead and the massive force causes a broken plank to send Lax flying high up in the air. Blue watches in amazement and realizes Green has made use of the seesaw effect of the rubbles and avoided a direct attack. Green smirks and says he guessed right away that Lax was using harden when it stayed motionless on the ground. Oak nods and takes comfort in the fact that his grandson has learnt to make use of different situations to enhance his battle skills, and attributes it to his battling alongside with Red on their journey. The announcer remarks that Red's Snorlax has been thrown off the stage and will be considered knocked out. He is about to declare Green the champion when a faint stir is heard high up in the air resembling the sound of a plummeting rocket. A dark object starts to take form and descends, and slowly turns out to be Lax as everyone watches in shock. The plumpy pokemon sticks out its fist and crashes into Machamp with a double-edge, knocking the fighting pokemon over. Red grins that turning unfavourable situations to his benefit is a skill he has mastered long ago.

Oak gets surprised at the boy's calmness in dealing with the situation and realizes he has learnt to stay cool and clear-headed from his grandson. Green checks on his Machamp and sees that it has one third of its HP left, then decides to recall it. Red remembers the time when Green forced his way to capture a Kangaskhan without paying notice to its poisoned infant, and smiles with content that the other boy has learnt to care for pokemons. Green calls out Ninetales and Red is about to order another attack from Lax when he realizes his pokemon has worn itself out in the last battle. He withdraws Lax and grins that he will always remember what Green said about good trainers being able to spot the huge difference in strength while facing off an opponent. Green returns the grin and says he won't forget what Red said about not taking advantage of upperhand situations in pokemon battles as well. Oak once again smiles with content that the two boys are learning from each other.

Red ponders on his next choice of pokemon and Bill sees that the two young trainers are equal in strength and skills, and that one single mistake would jeopardize either one's chance to win. High up in the audience stand, a gang of four is watching the battle. A young woman asks one of her companions, Bruno, to bet on the winner, but the big man returns her offer with silence. A young man wearing a cape tells them to pay attention to Red and an old lady holding a stick softly giggles.

Back on stage, Green's Ninetales starts creating small flames on it nine furry tails and hurls the combined fire attack towards Red. Green guesses that Red would switch in either Gyarados or Aerodactyl but to his surprise, the boy releases his Poli instead. The big blue frog dodges the burning flames and charges towards Ninetales, but the fox pokemon turns its attack into a huge fire blast and sends its opponent flying up to the ceiling with the heat wave generated. Poli smashes onto the ceiling and soaks the top of the dome-shaped stadium with its water. Red grunts at this and sends out Pika, but the little electric rat gets thrown up into the ceiling by the heat wave as well and crashes down together with Poli. Red withdraws his two nearly fainting pokemons while Green also recalls Ninetales and releases Charizard. Red hesitates for a while, then to everyone's surprise, calls out Saur.

Bill yells that the type advantage together with the existing flames on the stage would knock out Saur in no time, but Red grins and says it is time for Green and himself to end the battle with the two pokemons they received from Prof. Oak. Green remarks that the thought sounds poetic but says that being poetic does no good in pokemon battling. He orders a flamethrower from Charizard and Red immediately has Saur bind the fire lizard with its vines. Green scorns at the futile act but then notices that rainclouds begin to form in the stadium. Blue looks up to the ceiling and sees them as well, but immediately realizes they are in fact thunderclouds when sparks start coming off them. Red smirks and says Poli's water has generated rainclouds above the heated stage and Pika's electricity powered them up to be thunderclouds. He states that the use of Saur's vines are to act as lightning rods and Green gasps in shock as the grass pokemon extends its vines into the clouds, causing a thunderbolt to course through Charizard instantly. Green orders the fire lizard to retaliate with its flames and Red tells Saur not to give in after all they've been through. He recalls the bits and pieces he and his pokemons shared in the past, and says they are his best companions.

The fire and electricity explodes with a bang and the audience watches anxiously as the smoke starts to clear. Green and his Charizard come into view and the announcer is about to declare him winner when he starts collapsing to the ground with the fire lizard and everyone sees that it is Red who's standing still with his Pika, Poli and Saur. The announcer declares Red the new champion of the Pokemon League and the boy gives a heartful thank to his three best companions before falling down unconsciously to the ground.

A while later, the prize presentation ceremony is about to begin and Blue happily talks on the phone about the money she's rewarded for ending up second runner-up of the tournament. Bill cuts in and starts accusing her of lying again, but the girl grins and says that since Prof. Oak forfeited his place, she automatically gets promoted to own the title. Bill takes an uncertain look at the professor but the old man just shrugs and says it sounds logical. Blue then turns around and yells for Red and Green to hurry up for the ceremony. Red says they'll be there in a minute and Green gives an annoyed grunt and calls her pesky girl. The two battered rivals then give a knowing look to each other and can't believe just how far they've come.

High up in the air, the elusive psychic pokemon, Mew, hovers above the Indigo Plateau and turns to leave after giving both boys one final look as the young trainers decide to head back to their hometown, Pallet...